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Solving Four Problems at Once with a Guaranteed Basic Income for Canada

by John Brian Shannon

How could a Guaranteed Basic Income solve four problems in Canada, and what four problems might they be?

It’s a good question which can only be answered in the context of how these four things are being handled/not handled now.

So let’s see how a Guaranteed Basic Income could help Canada to care for people (including seniors, economic migrants to Canada, and refugees living in Canada) more efficiently than the present multilayered system.

Before we go any further, every group or individual who supports a Guaranteed Basic Income (GBI) may have a different idea of what constitutes a Guaranteed Basic Income. So to keep things simple for the purposes of this discussion, let’s agree for the rest of this post that a Canadian GBI would offer the following benefits to recipients:

  1.  $1088. per month (a standard anti-poverty metric)
  2.  Free provincial healthcare with no deductible
  3.  Free provincial dental care with no deductible
  4.  Free prescriptions with a $50 annual deductible
  5.  Low entry bar to access: Must be a Canadian citizen or legally landed immigrant
  6.  Over the age of majority in the province in which they reside
  7.  A person earning less than the official poverty line amount in the province in which they reside
  8.  Not a person serving time in prison
  9.  Not a person serving in Canada’s military
  10.  Not a person under 24/7/365 medical care (like a person in a long-term coma)

With that said, let’s see what a GBI can do for all Canadians — and not just the actual recipients of those benefits.


GBI Benefit Number One for Canada and its Provinces:

Saving Provinces and Taxpayers Money

Kick every welfare recipient in Canada off of provincial welfare and provincial disability programmes the moment the GBI comes into effect.

Yes, end provincial welfare and provincial disability programmes completely!

It sounds traumatic, but every province in Canada spends multi-millions (and depending on the size/population of the province) billions on the administrative support (administration buildings, office staff, other personnel, IT costs, security costs, land costs, property management costs, management training/seminars, etc) to pay provincial welfare and provincial disability recipients. This is known as the ‘overhead’ cost of running these programmes, and the gross annual totality of those administrative costs can be more than all of the welfare cheques combined.

For each welfare recipient who gets a $700 monthly welfare cheque, there is obviously a per capita cost for every person receiving a monthly welfare cheque; There is a person being paid $50,000/yr (or more) to administer a certain number of recipients, there is a building (or buildings) dedicated to that city, town, or region of the province, and there are other costs associated with running provincial social assistance programmes.

Every province has its own welfare and disability administration. That’s overlapping and duplication of services tenfold (10 provinces) and three territories, plus the federal government.

By paying poverty-stricken people via the federal CPP payments system only, the provinces would no longer be obligated to pay provincial welfare or provincial disability payments. At all. Ever.

After the transition period to a pan-Canadian GBI each province could lower the taxes it charges to its residents by a corresponding amount. Some provinces might be able to drop their provincial sales tax in half or better! Other provinces might be able to abolish provincial income tax altogether.

This is especially true if provinces decide to sell-off all the infrastructure associated with welfare and disability payments. Which (land and buildings especially) could net them many billions of dollars.

‘Yi-Haw!’ — said every Canadian premier.

In short, instead of 13 multilayered, overlapping and duplicated provincial and federal income assistance programmes (now that’s approaching communist-era levels of duplication my friend!) there would be one payer of income assistance only — Canada’s federal government — which would be 100% responsible for administrating the GBI programme.

To finance the GBI, the federal government might need to raise the GST rate by 1% (don’t forget that your provincial taxes would be dramatically lowered) or the feds might decide to raise the federal income tax rate by 1% on the richest Canadians instead.

Either way, provincial taxes would fall dramatically, while federal taxes would see a fractional increase.


GBI Benefit Number Two for Canada and its Provinces:

A GBI Would End Homelessness in Canada

Welfare rates in Canada are based on each province’s ability to pay, not on how much it actually costs to feed, clothe, and shelter a human being in that province. Which is why there is homelessness in a rich country like Canada.

The reason there is homelessness in Canada are threefold:

  • A person lives in a city where rents are high and therefore can’t afford to pay rent, nor do they have enough money to be able to afford to move to a rural area where rental rates are a fraction of the lowest rents in Canada’s biggest cities.
  • A person becomes depressed or violent on account of not being able to afford rent, and ends up committing offenses (like sleeping in someone’s backyard, pickup truck box, or dumpster) or commits property crimes (and gets caught and jailed) and subsequently, no one will rent him or her a place.
  • A person is disabled and is unable to afford rent, nor can they move to a cheaper rental market because they need to be close to a hospital, a clinic, or other medical facility. In some cases, it’s that they have enough money for their rent, or their meds, but not both.

A federally funded GBI would pay enough to allow low-income people to pay rent, eat, receive their prescription medications, buy clothing — and yes, unlike provincial welfare schemes — allow them a little extra money so they can purchase work-related clothing, get a haircut and take the bus to work if they land a job.

Not only all that, but many welfare recipients have serious dental problems. If you’re an employer and you have 50 people apply for 1 job opening, are you likely to hire that one guy who is missing his front teeth? Not likely. With a GBI, those people can get their dental work done and appear as presentable as the rest of the job-seekers and have as good a chance to land the job as the other 49 people.

Provincial welfare systems just can’t afford to provide all that, which means that once people get on welfare, they’re often on it for life.

And they can face reductions in their monthly benefit amount if they do earn money. That just doesn’t happen with a GBI.

Indeed, provincial welfare systems can reduce monthly benefits for many reasons, such as more than one person living in a dwelling. In British Columbia for example, the rent portion of the welfare cheque is regulated to $375. per month (not too many places available for rent in BC for $375/month!) but if two people on welfare live together at the same BC address, both will have their monthly welfare cheque reduced. Now you have ‘two upset homeless people’ instead of ‘one homed couple’.

Which directly impacts crime stats. See how that doesn’t work for taxpayers?

Paying people a standardized $1088 per month (no matter how many people live in the same house or apartment as long as all zoning bylaws are met) will allow people to share accommodations — leaving them enough money every month to eat, buy work-related clothing, haircuts, bus passes, etc. and eventually get them back into the workforce.

Hey! Even if they can work part-time that is a benefit to them and to society because it means that eventually they’ll find permanent employment and they won’t need GBI.

That is the ultimate goal of GBI: Temporary assistance to get back to work — instead of welfare for life.


GBI Benefit Number Three for Canada and its Provinces:

Streamlining the Payments System for Canadian Citizens, Refugees and Economic Migrants

Some poverty-stricken refugees and economic migrants to Canada receive higher amounts of assistance from the federal government than poverty-stricken Canadians.

For instance, some Syrian refugees are receiving $2600 per month from the federal government — that’s per family member!

So, a Syrian refugee family of five receives $13,000 per month no matter where they live in Canada, while a poverty-stricken Canadian-born family of five might receive $1600 per month (or less!) depending on the province in which they reside.

Is that right? Is that how generous Canada is to refugees, but not to its own citizens?

It’s an honourable thing for Canada to accept refugees from war-torn countries and help them to establish a new life here. But isn’t that a little extravagant?

Shouldn’t refugees and economic migrants to Canada as well as Canadian-born adult citizens who earn less than the poverty line amount and Canada’s senior citizens all receive the same level of benefit?

The GBI would pay the same amount to everyone without any reductions in the monthly benefit amount for those who share accommodations, for those who earn money up to the poverty line amount, nor reductions for any other reason, except to pay fines as adjudicated by the courts like vehicle fines or alimony payments, etc.

In this way, every adult who earns less than the official poverty line amount would receive the same monthly benefit amount instead of wildly different amounts. Doesn’t that seem more fair?

Isn’t that a better way to treat citizens and immigrants than the various overlapping and duplicated payments systems? Of course it is.


GBI Benefit Number Four for Canada and its Provinces:

Treating Canada’s Senior Citizens Better

Under the existing CPP and OAS system, some of Canada’s senior citizens receive small amounts of money to live on.

Let’s look at a comparison of a Canadian-born senior citizen couple vs. a Syrian-born refugee couple, both couples reside in Canada.

a) The Canadian-born senior citizen couple may receive as little as $920 per month, and are allowed to work.
b) The Syrian-born senior citizen refugee couple will receive $2176 per month, and aren’t allowed to work.

It seems unfair in the extreme that the people who built this great country should receive far less reward than recent immigrants, doesn’t it?

Of course, it goes without saying that accepting refugees from war-torn countries is a truly noble thing to do. No true Canadian begrudges law abiding persons a better life here in Canada. The country is practically empty and our cities are just tiny dots in a 9.985 million square kilometre landscape so we’re glad to have them.

And paying them $1088 per month (each adult) along with the other GBI benefits seems reasonable, just like it seems reasonable to pay the same amount to Canadian-born seniors who live under the poverty line.

It’s wrong to pay the people who built this great country into what it is today such pitiful amounts of money (which they paid into the CPP fund their entire working lives) while we pay refugees many times more.

It’s like a scene from The Twilight Zone.

By topping-up the pension amount of Canadian citizens to the $1088/mo GBI amount + the GBI benefits, we can do away with the OAS programme completely, do away with pharmacare for senior citizens, and eliminate other overlapping federal and provincial programmes in place to support seniors.

Getting rid of all these layers of duplication will save various levels of government billions of dollars per year, and put the administration of all citizens who live under the poverty line under one roof, one payments system, and one jurisdiction. And we know that ending government waste, overlapping programmes between the federal and provincial governments, and duplication of services between the provinces will save taxpayers billions of dollars every year!

It’s time to streamline Canada’s income assistance systems, it’s time to top-up the incomes of senior citizens to $1088 per month + benefits, it’s time to pay refugees the same amount as Canadian citizens living under the poverty line would receive, and it’s time to put a stop to the costly multilayered benefit systems in Canada.

A GBI would be less costly for taxpayers, it would reduce homelessness and property crimes, it would streamline the benefits payment system and it would help poverty-stricken senior citizens live healthier lives and reward them in a small way for their contributions to our great land.

The Right Carbon Tax for Canada

by John Brian Shannon

“Canadian business needs a fair, transparent, and proportional carbon tax to spur action towards a cleaner environment.”

Which is not the same statement asCanada must punish Canadian industry so the country can meet it’s COP21 emissions targets.”

See the difference?

Unfortunately, in the rush to meet Canada’s global air quality commitments (admirable) the federal government may have leaned more towards ‘action’ on the carbon file rather than ‘smooth implementation’ of the carbon file (forgivable) and now has at least two provincial premiers questioning the mechanics of the federal carbon tax plan.

In the end, both methods would result in Canada’s emissions targets being met, but one way is complimentary while the other is confrontational.

Which of the two ways exampled above would cause you to want to work with the federal government to reach Canada’s international emissions obligations?


No Need to Reinvent the Wheel – Just Fix the Broken Parts and Carry On

Federal Carbon Taxes: Small business always suffer in these scenarios, while large corporations already have multi-million dollar environmental + energy budgets — which means all that’s required for them to meet upgraded emissions targets is a shift in their budget allocations to meet Canada’s new emissions regulations.

Therefore, for polluters emitting less than one megatonne of CO2 annually, such companies shouldn’t pay any carbon tax until they surpass that limit and thenceforth begin to pay a $40. per tonne carbon tax (for example) on any emissions beyond the one megatonne threshold.

Likewise, large companies shouldn’t be required to pay carbon tax until the point in the year is reached where they surpass the one megatonne limit and only then begin to pay $40. per tonne of CO2 (or CO2 equivalent, because not all airborne emissions are of the CO2 variety) on each additional megatonne for the rest of the calendar year.

In this way, Canada’s carbon tax model would be a breeze to implement, a carbon tax that would be small business-friendly, and one that provides an incentive to bigger companies to work toward reducing their emissions over the longer term.


Carbon Taxes Administered by Provinces and Cities

Provincial carbon taxes: Provincial and city carbon taxes should be ‘flow-through’ carbon taxes where 100% of each dollar collected at the transactional level (a point-of-sale tax like a provincial sales tax) is spent on poverty alleviation, or on energy conservation + investment in green energy projects + green energy bonds. As is already done in some Canadian provinces.

Provinces and cities that face serious air quality problems would be thereby empowered by federal legislation to address their unique air pollution issues and be better positioned to help Canada meet its international emissions targets while lowering their healthcare and environmental spending associated with air pollution.


Annual Step-up Carbon Tax

Start with a low carbon tax: If the ‘year one’ federal carbon tax is set at $40. per tonne, the next year could be set at $50. per tonne, and ‘year three’ $60. per tonne, etc., it would allow Canada to continue to meet its emissions goals and to lower environmental and healthcare spending in Canada where a significant proportion of healthcare budgets are devoted to treat respiratory ailments brought-on or worsened by the poor air quality in Canadian cities (and some high land use agricultural areas) and could actually save provincial budgets millions of dollars per year.

If there’s one thing that markets and big business like, it’s a long lead time for new regulations and a ‘carbon-tax-free-zone’ that they can shoot for which will help them lower costs by increasing efficiency (which is closely tied to productivity, ask any economist) and a step-up carbon tax gives them the opportunity to adjust their operations several years ahead of the time when it could begin to get very costly for them.

Hitting Canadian companies with a $220. per tonne carbon tax (which is what Stanford University says is the true environmental and healthcare cost of each tonne of carbon) would prevent companies from attracting the funding required to lower their emissions.

In a perfect world, legislators would slap a $220. per tonne carbon tax on every level of government, each corporation and on citizens and all of them could afford to pay it. Sadly, that isn’t possible. But starting out at $40. per tonne allows companies to begin the process of lowering their emissions without stressing corporate finances.

If you doubt how costly pollution is to the economy, see the landmark study from Harvard Medicine which estimates coal-burning alone costs the U.S. economy between $330 billion and $500 billion per year.


The Need to Address Carbon Pollution

It’s indisputable to any educated person that Canada and every other country needs to address carbon pollution — but ultimately, carbon taxes must be designed to mesh with the overall economy — not entangle it.



Visit The Solutions Project to see how renewable energy can work in your jurisdiction to help citizens live healthier lives, care for the environment, boost the economy and help Canada meet its international air pollution targets.

Images below are courtesy of The Solutions Project

Our 100% Clean Energy Vision for Canada - The Solutions Project. Image 1.

Our 100% Clean Energy Vision for Canada – The Solutions Project. Image 1. Click on image to expand it via your browser tools.

Our 100% Clean Energy Vision for Canada - The Solutions Project. Image 2.

Our 100% Clean Energy Vision for Canada – The Solutions Project. Image 2. Click on image to expand it via your browser tools.

Our 100% Clean Energy Vision for Canada - The Solutions Project. Image 3.

Our 100% Clean Energy Vision for Canada – The Solutions Project. Image 3. Click on image to expand it via your browser tools.

Visit The Solutions Project main webpage here for more information.



Bonus Graphic courtesy of the Canadian Association of Petroleum Producers

 

While the federal government of Canada seeks to meet its international emissions targets, Canadian premiers press for a more business-friendly carbon tax regime.

While the federal government of Canada seeks to meet its international emissions targets, Canadian premiers press for a more business-friendly carbon tax regime. Image courtesy of the Canadian Association of Petroleum Producers. Click on image to expand it in your browser.

Hitting the Right Note with President Trump: Canada’s Foreign Minister Chrystia Freeland

As trade tensions rise between the United States of America and its traditional allies, Canada’s Foreign Minister Chrystia Freeland hits the right note in responding to U.S. President Donald Trump as she accepts the Diplomat of the Year Award from Foreign Policy magazine.

Below are both the full video and transcript of her speech courtesy of ForeignPolicy.com



TRANSCRIPT


“Tonight, I would like to speak about a challenge that affects us all: and I believe worries us all, and that is the weakening of the rules-based international order and the threat that resurgent authoritarianism poses to liberal democracy itself.

I’d like to start on a personal note. In the 1980’s and 1990’s, I studied and worked as a reporter in what was first the USSR and while I was living there [it] became independent Ukraine and Russia.

My experience of watching from the inside as this vast authoritarian regime crumbled, profoundly shaped my thinking. It was a euphoric moment, and one in which it was tempting to imagine that liberal democracy was both inevitable and invulnerable.

As Francis Fukuyama put it, we seemed to have reached the ‘end of history’.

Fukuyama wasn’t, of course, arguing that history had ground to a halt. Rather, he was saying that the half-century-long competition between liberalism and authoritarianism had been settled and that liberal democracy had won. What a seductive argument.

Now, we harbored no illusions then, that institutions such as the WTO, or the IMF, or the World Bank, or the U.N. were perfect. Or that that our own democracies at home with their sausage-making methods of legislating and governing were without flaw.

But there was a broad consensus that the Atlantic nations, plus Japan, led an international system of rules that had allowed our peoples’ to thrive and which would surely continue to do so. Crucially, this was built as a system that other nations, emerging powers could join, and join they have.

The past 25 years have seen the rapid rise of the global south and Asia, most prominently China, as major economic powers in their own right. We created the G20, with Canadian leadership I might add. Russia was invited into the G7 making it the G8 in 1998, and the WTO in 2012. China has been a WTO member since 2001.

In Latin America, in the Caribbean, in Africa, and in Asia, developing countries have joined these institutions and accepted their rules, and that has delivered ever-greater living standards to their people.

But although this was and remains a broadly positive evolution, with extraordinary gains, in reducing extreme poverty, lengthening lives and decreasing infant mortality, one assumption about this great global shift turned out to be wrong: that was the idea that as authoritarian countries joined the global economy and grew rich, they would inevitably adopt Western political freedoms too. That hasn’t always happened. Indeed, in recent years, even some democracies have gone in the other direction and slipped into authoritarianism, notably and tragically, Venezuela. And some countries that had embarked on the difficult journey from communism to democratic capitalism have moved backwards. The saddest personal example for me is Russia.

Even China, whose economic success in lifting hundreds of millions of people out of poverty is one of the great accomplishments of recent times, stands as a rebuke to our belief in the inevitability of liberal democracy.

And within the club of wealthy Western nations, we are seeing homegrown anti-democratic forces on the rise. Whether they are neo-Nazis, white supremacists, incels, nativists, or radical anti-globalists, such movements seek to undermine our democracies from within. Liberal democracy is also under assault from abroad. Authoritarian regimes are actively seeking to undermine us with sophisticated, well-financed propaganda and espionage programs. And they seek to suborn smaller countries, those wavering between democracy and authoritarianism.

Now, the idea that democracy could falter or be overturned in places where it had previously flourished may seem outlandish. But other great civilizations have risen and then fallen. It is hubris to think we will inevitably be different. Our Prime Minister likes to say about our country that Canada didn’t happen by accident and it won’t continue without effort.

The same can be said of liberal democracy itself.

Now let’s set aside the external malevolent actors for a moment. Why are liberal democracies vulnerable at home?

Here’s why: Angry populism thrives where the middle class is hollowed out, where people are losing ground and losing hope, even as those at the very top are doing better than ever. When people feel their economic future is in jeopardy — when they believe their children have fewer opportunities than they themselves had in their youth, that’s when people are vulnerable to the demagogue who scapegoats the outsider, the other, whether it’s immigrants at home or trading partners abroad.

The fact is, middle-class working families aren’t wrong to feel left behind. Median wages have been stagnating. Jobs are becoming more precarious, pensions uncertain, housing, childcare, and education harder to afford. These are the wrenching human consequences, the growing pains, if you will, of the great transformative forces of the past 40 years — the technology revolution and globalization.

Now, of the two, technology is having the greatest impact. But even free traders like me need to recognize that globalization has contributed as well. So, what’s the answer?

I think we are agreed that it is not, as the Luddites unsuccessfully proposed at the start of the Industrial Revolution, to stop the march of technology. We all love our smartphones too much.

When it comes to trade though, we do need to introduce labor standards with real teeth as Canada and the EU have done in our free trade agreement, and as we are discussing as part of our ongoing NAFTA modernization negotiations. It is long past time to bring the WTO up to date with the realities of 2018 and beyond. We need to seriously address non-tariff barriers to trade and force technology transfers.

However, and overwhelmingly, the chief answer to the legitimate grievances of the middle class lies in domestic policies.

The middle class and people working hard to join it need the security that comes from educationing your youth, health care for your family, good jobs for your children, and dignity in your retirement.

We need to think about what the jobs of the future for our citizens will be, and ensure that those jobs will pay a living wage and that our people have the skills to do them. Perhaps most importantly, and this is work that would benefit from international cooperation, in a 21st century in which capital is global but social welfare is national, we need to ensure that each of our countries has the durable tax base necessary to support the 99 percent.

(applause)

But setting our own house in order is just one part of the struggle. The truth is that authoritarianism is on the march and it’s time for liberal democracy to fight back. To do that, we need to raise our game.

One device strongmen use to justify their rule is the Soviet trick of whataboutism. The strategy of false moral equivalency which holds that because democracies are inevitably imperfect, they lack the moral authority to criticize authoritarian regimes.

We heard this species of cynical rhetoric for example, from the Venezuelan foreign minister at the Organization of American States meeting in Washington just last week. We must be smart enough to see through it. It’s possible, indeed necessary, for us to acknowledge that our own democracies aren’t perfect.

The record of my own country’s relationship with indigenous peoples, for example, is one of tragic failure.

But admitting our mistakes doesn’t discredit us. On the contrary, it is one of the things that makes us who we are. Authoritarianism is also often justified as a more efficient way of getting things done. No messy contested elections, no wrenching shift from one short-termist governing party to another, no troublesome judicial oversight, no time-consuming public consultation. How much more effective the apologists argue for a paramount leader with a long-term vision, unlimited power and permanent tenure, to rule.

We need to resist this corrosive nonsense. We need to summon Yeats’ oft-cited passionate intensity in the fight for liberal democracy and the international rules-based order that supports it.

Remember those great words at Gettysburg. Government of the people, by the people, for the people, shall not perish from the Earth. Preserving Lincoln’s vision means striking back. It means resisting foreign efforts to hijack our democracies through cyber-meddling and propaganda. It means outshining the other models and encouraging those who are on the fence. And it means governing with integrity.

Facts matter. (applause) Truth matters. (applause) Competence and honesty among elected leaders and in our public service matter. (applause)

Now, I’d like to speak directly to Canada’s American friends and to my own many American friends who are here in this room.

Let me begin by simply saying: Thank you.

For the past 70 years and more, America has been the leader of the free world. We Canadians have been proud to stand at your side and to have your back. As your closest friend, ally, and neighbor, we also understand that many Americans today are no longer certain that the rules-based international order of which you were the principal architect and for which you did write the biggest cheques, still benefits America.

We see this most plainly in the U.S. administration’s tariffs on Canadian steel and aluminum imposed under the 232 national security provision. We share the world’s longest undefended border. Our soldiers have fought and died alongside yours in the First World War, in the Second World War, in Korea, in Afghanistan, and in Iraq.

The idea that we could pose a national security threat to you is more than absurd, it’s hurtful.

(applause)

The 232 tariffs introduced by the United States are illegal under WTO and NAFTA rules. They are protectionism pure and simple. They are not a response to unfair actions by other countries that put American industry at a disadvantage. They are a naked example of the United States putting its thumb on the scale in violation of the very rules it helped to write. Canada has no choice but to retaliate with a measured, perfectly reciprocal, dollar for dollar response. And we will do so. We act in close collaboration with our like-minded partners in the EU and Mexico.

They too are your allies, and they share our astonishment and our resolve.


Chrystia continues her speech in Canada’s other official language (French) then reverts to English, as below…


No one will benefit from this beggar-thy-neighbour dispute. The price will be paid in part, by American consumers and American businesses and the price will also be paid by those who believe that a rules-based system is worth preserving.

Since the end of the Second World War, we have built a system that promoted prosperity and prevented smaller and regional conflicts from turning into total war. We’ve built a system that championed freedom and democracy over authoritarianism and oppression. Canada for one, is going to stand up in defense of that system. We will not escalate and we will not back down.

We remember a time when the United States believed great international projects like the Marshall Plan or the reconstruction of Japan were the path to lasting peace. When America believed its security and prosperity were bolstered by the security and prosperity of other nations. Indeed, that America could only be truly safe and prosperous when its allies were too. This vision, the greatest generation’s vision, was crucially dependent on the rules-based international order and the postwar institutions built to maintain it. It was based upon the willingness of all, especially the strongest, to play by the rules and be bound by them. It depended on the greatest countries of the world giving up, collectively, on the idea that ‘might made right’.

Now, the Second World War was over 70 years ago, it is reasonable to ask whether our grandparents’ hard-won wisdom still applies today. I am certain that it does and for some new reasons.

After the devastation of the Second World War, the United States was the unquestioned colossus, accounting alone for half the world’s economy. Today, the U.S. economy stands at just a quarter of the world’s. Together, the EU, Canada, and Japan, your allies in the G-7 and beyond, account for just a little bit more. China, meanwhile, produces nearly 20 percent of the world’s GDP. And in our lifetimes, its economy is set to become the world’s largest.

Now, that’s not necessarily a bad thing.

Americans, Canadians, and Europeans are much richer and healthier, and live longer than our grandparents did. The ‘rise of the rest’ has been a chapter in the story of our own increased prosperity. And it’s only natural that the 85 per cent of people who live outside the industrialized West should, over time, account for a greater and growing share of the world’s wealth.

But that shift leaves the Western liberal democracies with a dilemma. How shall we behave in a world we no longer dominate?

One answer is to give up on the rules-based international order, to give up on the Western alliance and to seek to survive in a Metternichian world defined, not by common values, mutually-agreed upon rules and shared prosperity, but rather by a ruthless struggle between the great powers governed solely by the narrow, short-term, and mercantalist pursuit of self-interest.

Canada could never thrive in such a world. But you, still the world’s largest economy, may be tempted. That, of course, is your sovereign right. But allow me, as your friend to make the case that America’s security amid the inexorable ‘rise of the rest’ lies in doubling-down on a renewed rules-based international order. It lies in working alongside traditional allies like Canada and alongside all of the younger democracies around the world.

From the Americas, to Africa, to Asia, to the former Soviet Union — who are so keen to join us and who yearn for leadership, you may feel today that your size allows you to go ‘mano a mano’ with your traditional adversaries and be guaranteed to win. But if history tells us one thing, it is that no one nation’s preeminence is eternal.

That is why the far wiser path and the more enduring one is to strengthen our existing alliance of liberal democracies. To hold the door open to new friends. To countries that have their own troubled past such as Tunisia, Senegal, Indonesia, Mexico, Botswana, or Ukraine.

To reform and renew the rules-based international order that we have built together. And in so doing, to require that all states, whether democratic or not, play by these common rules.

This is the difficult truth. As the West’s relative might inevitably declines, now is the time when, more than ever, we must set aside the idea that ‘might is right’. Now is the time for us to plant our flag on the rule of law so that the rising powers are induced to play by these rules too.

To explain my faith in you, in America, let me remind you of the ‘City on the Hill’ Ronald Reagan evoked in his farewell speech in 1989. It was a tall, proud city, built on rocks stronger than oceans, windswept, God-blessed, and teeming with people of all kinds living in harmony and peace. A city with free ports that hummed with commerce and creativity and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get there.

This city, open to trade, open to immigrants, speaks to Canada’s values too. Indeed, these are the values of liberal democracy. These values are under attack from outside our walls. Most corrosively, even inside the shining city some have begun to doubt them. My country, Canada, believes in these values. We are ready to defend them and the rules-based international order that unites all of the world’s cities on the hill.

Our friends among the world’s democracies in Europe, in Asia, in Africa, and here in the Americas are shoulder to shoulder with us. We all know we will be strongest with America in our ranks and indeed, in the lead. But whatever this great country’s choice will turn out to be, let me be clear that Canada knows where it stands, and we will rise to this challenge. Thank you.”  — As read by Chrystia Freeland, Foreign Minister for Canada, June 14, 2018